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Netanyahu Heads to China to Discuss Trade Amid Tension

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Israeli Prime Minister Benjamin Netanyahu
Israeli Prime Minister Benjamin Netanyahu has set a goal of bringing trade with China to $10 billion within three years, from about $8 billion. Photographer: Sebastian Scheiner/Pool/Getty Images

May 6 (Bloomberg) -- Israeli Prime Minister Benjamin Netanyahu arrived in China on a mission to strengthen ties with its No. 3 trade partner and to press for tougher action against Iran and Syria, which has accused Israel of attacking it.

“We must make the national effort to enter Chinese markets and to create partnerships,” Netanyahu said in a meeting today in Shanghai with a delegation of Israeli executives whose companies do business in China. “In addition to your private initiatives, we need to create a government track with the Chinese.”

Netanyahu has set a goal of bringing trade with China to $10 billion within three years, from about $8 billion, his office said in a statement yesterday. In addition to Chinese President Xi Jinping and Prime Minister Li Keqiang, he plans to meet industrialists and businesspeople in Shanghai and Beijing to advance a free trade agreement and economic cooperation accords, according to the statement.

Government Ties

Boosting government ties “is crucial to Israel getting its fair share of the China market,” said Elisha Yanay, chairman of the Israeli Association of Electronics & Software Industries, after the Shanghai meeting. “To do business in China you must have the support of its leadership, and we must leverage the prime minister’s visit to build the kind of governmental relations that will enable that,” said Yanay, also chairman of Runcom Technologies Ltd.

Commercial links between the two countries have taken off in the past decade. China is Israel’s third-biggest trading partner, after the U.S. and European Union, with imports in 2012 totaling $5.3 billion and exports at $2.8 billion, according to Israel’s Central Bureau of Statistics. Israel’s main exports to China are chemicals mined from the Dead Sea by Israel Chemicals, electronic components and agrotechnology.

“Israel’s exports to China are dominated by a few big companies like ICL and Intel, so what Netanyahu and his team have to do is promote more medium and small companies,” said Ilan Maor, managing director of SHENG-BDO Zvi Haft, which assists Israeli and Chinese companies doing business together. “The Chinese are especially interested in Israeli expertise in technology, including life sciences, renewable energy, water treatment and homeland security.”

Water Technology

Last year, Israel signed an accord to sell China $300 million in water technology.

Chinese investment in Israel has also grown, including the 2011 sale of 60 percent of fertilizer maker Makhteshim-Agan Industries Ltd. to China National Chemical Corp. for $2.15 billion and last month’s acquisition of Alma Lasers Ltd. by Shanghai Fosun Pharmaceutical (Group) Co. for about $240 million. Israeli companies with operations in China include Iscar Metalworking Co. and Israel Corp.’s electric car venture Better Place.

Israeli officials have talked to the Chinese about working on a proposed rail link between Israel’s Mediterranean ports and its Red Sea port of Eilat, meant to open an alternate trade route to the Suez Canal. That prospect may now seem more attractive to China with Israel’s recent discoveries of natural gas fields large enough to allow exports.

Syria Attack

Netanyahu boarded his plane the same day Syria said it was attacked by Israeli missiles. En route to Shanghai, his first stop, the prime minister declined to answer questions about Syria. He warned last week that Iran “must not be allowed to cross” the threshold where it can produce a nuclear weapon.

The trip may give Israel an opportunity to present its case to Chinese leaders who took power after November’s Communist Party congress while they are still forming their strategic outlook on the region. Netanyahu’s visit overlaps with a visit to China by Palestinian Authority President Mahmoud Abbas, though the two have no plans to meet.

“The Chinese leadership was recently replaced and it is expected to rule there for the coming decade,” Netanyahu’s office said in a statement. “Issues of strategic importance in a variety of fields are expected to be raised in Prime Minister Netanyahu’s meetings with senior leaders of the new administration; new bilateral agreements will also be signed.”

Tough Sell

China, in its own media coverage ahead of the trip, has barely mentioned Syria or Iran, focusing instead on trade and China’s desire for Israeli technology.

Netanyahu may find it easier to sell China on Israel’s economy than persuade it to support harsher sanctions on Iran or exert more pressure on Syria, said Yitzhak Shichor, a professor emeritus in Asian studies at the Hebrew University in Jerusalem and the University of Haifa.

On political matters, “the likelihood of Israel persuading China to change its mind is almost nil,” Shichor said. “The Chinese have other interests that have nothing to do with Israel.”

At the same time, he said, the economic issue “is very, very important” because it strengthens ties without political complications. “Everyone is interested in commercial ties, academic ties,” Shichor said. “This is where there might be concrete results.”

Iranian Oil

Iran is a top supplier of oil to China, which has used its veto power in the United Nations Security Council to undercut more stringent U.S.-backed measures against the Iranian government. Netanyahu says Iran, despite its denials, is using its civilian nuclear program as a cover to build bombs and he has hinted repeatedly he would be prepared to attack it.

China has also bucked Israel and its Western allies on Iranian-backed Syria, vetoing UN resolutions condemning President Bashar al-Assad and opposing direct intervention.

Israel has said it would prevent Syria from transferring chemical weapons and other advanced arms to Assad allies such as the Iranian-backed Lebanese militia Hezbollah, which warred with Israel in 2006. It is suspected of having attacked a Syrian convoy in January for just that reason, and twice within the past few days. Israel has not confirmed these attacks.

To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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